USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 38

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
R_it = return for stock i during period t
R_mt = return for the aggregate market during period t
-Refer to Exhibit 5.6. Stock X had an actual return of 14 percent, and Stock X's normal return based on the market's return for the same period was 13.6 percent. What is Stock X's abnormal rate of return?

• A) -0.4 percent
• B) 0.1 percent
• C) 0.4 percent
• D) 4.0 percent
• E) 6.4 percent

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Definitions:

Private Ownership

The legal right of individuals or entities to own property and assets independently of the government or communal entities.

Criminal Laws

The body of law that relates to crime, prescribing the conduct perceived as threatening, harmful, or otherwise endangering to individuals and property, including the punishment of people who violate these laws.

Provincial Governments

The governing bodies of provinces within a country, responsible for managing regional issues and implementing laws and policies at the provincial level.

Inequality

The unequal distribution of resources, opportunities, rights, and power among people in a society.